Washington Mutual became the largest bank failure in US history on a pile of risky.

Washington Mutual (WaMu) was the largest savings and loan institution in the United States. In the years before 2008, it grew aggressively by making risky home loans — especially subprime mortgages and 'option ARMs,' adjustable-rate loans that let borrowers pay so little upfront that their balances could grow. These loans looked profitable while house prices rose, but they were a bet that the housing market would keep climbing.

When the housing market turned, the loans went bad in huge numbers. Borrowers defaulted, the value of the mortgages collapsed, and depositors — spooked by the bank's losses — began pulling their money out. In the ten days before its failure, WaMu suffered a run of about $16.7 billion in deposits.

On September 25, 2008, regulators seized Washington Mutual in what was then the largest bank failure in US history. The FDIC took control and immediately sold the bank's operations to JPMorgan Chase for $1.9 billion. Shareholders and most bondholders were wiped out. WaMu's collapse, days after Lehman Brothers, was another landmark of the 2008 crisis — a reminder that a bank built on risky lending and fragile deposits can fail with stunning speed.